The UP CIDS Political Economy Program held a two-part multi-stakeholder discussion that tackled the industrial, labor, and security implications of the closure of the Subic-based shipbuilder Hanjin Heavy Industries and Construction Corporation (HHIC) Philippines in January 2019. Both events brought together key representatives from the government, industry, academe, and civil society organizations to explore the strategic uses of the shipyard and their implications for national security and development.
The first roundtable discussion, entitled “Saving Hanjin? Implications for Labor and Industrial Policy’’ was held on 14 March 2019, and gathered policy experts and concerned sectors to draw out different approaches to and recommendations on resolving the Hanjin problem, related labor concerns, and its implications on Philippine industrial policy.
During the discussion, Mr. Efren Vinluan, President of the Samahan ng mga Manggagawa sa Hanjin Shipyard, called for support for the workers’ demands from the management, who had laid off around 7,000 workers toward the end of 2018. These demands include the release of the workers’ separation pay and unemployment subsidy, and preferential reemployment for when the facility resumes operations. Department of Labor and Employment (DOLE) Bureau of Labor Relations representative Atty. Ramon Saura assured that workers’ claims are prioritized over that of the creditors, and likewise called for support for the Security of Tenure Bill pending in the Senate, which would minimize the subcontracting practices under which the Hanjin workers were hired.
Dir. Dominique Rubia-Tutay of the DOLE Bureau of Local Employment added that it is also important to develop the country’s human capital so that they are equipped with the necessary skill sets for emerging trends in shipbuilding (e.g., technologies for building automated, environment-friendly ships). Adding on initiatives to better respond to industry needs, Engr. Arsenio Lucas of the Maritime Industry Authority (MARINA) shared that their current initiatives include improving the capabilities of domestic shipyards, such as assessing their capabilities and ensuring that they can build vessels weighing 500 gross tonnage (GT) and below.
Discussing the business side of the issue, Mr. Reynaldo Lignes, Chief Investments Specialist and Sectoral Champion for Shipbuilding and Iron and Steel under the Department of Trade and Industry (DTI)—Board of Investments, explained how Hanjin, which produced large commercial vessels for export, had been instrumental in catapulting the Philippines into being the 5th largest shipbuilder worldwide. He further reported that the BOI had been in talks with a number of foreign investors who are interested in taking over the shipyard’s operations. In this plan, the DTI would be working with local banks to recoup the latter’s investments through the lease and sale of assets to a third party. Nonetheless, Mr. Lignes assured that the country’s economic interests will take into account potential security concerns, with the facility’s strategic location being a maritime asset.
Representatives from the University and CSOs likewise gave their own recommendations on possible arrangements and for the former Hanjin shipyard. Dr. Eduardo Tadem, Convenor of the UP CIDS Program on Alternative Development, proposed that the shipyard be turned over to its workers, a practice called workers’ recuperation that has had a history in other countries. Dr. Rene Ofreneo, Professor Emeritus of the UP School of Labor and Industrial Relations, argued that the Hanjin situation presents an opportunity to revisit existing industrial policies and even develop an integrated industrial development program. Meanwhile, Mr. Czar Joseph Castillo of the Labor Education and Research Network shared a simulation on employment that they prepared, which shows that if the Philippines could increase its shipbuilding exports by P1 billion, around 26,000 jobs would be created.
The follow up activity to this RTD was a policy dialogue entitled “Reimagining Hanjin: Economic and Security Prospects’’, which was held on 07 May 2019 and focused on the status of Hanjin Subic Bay complex and the possible role it can play in promoting maritime security and developing the maritime economy. Key speakers for the dialogue were representatives from the Philippine Navy, DTI, and the Shipyards Association of the Philippines.
Stressing security concerns and the growing needs of the Philippine Navy, Rear Admiral Giovanni Carlo Bacordo presented the Navy’s proposal for the shipyard—to a have a joint venture where the shipyard will be owned by the Philippine government but managed by a third party (i.e., local or foreign company). The facility could then service all government entities with shipbuilding and repair needs, such as the Philippine Navy, Philippine Coast Guard, and the Bureau of Fisheries and Aquatic Resources. The proposal also included using the facility to build naval vessels, following the trend of increasing global demand for these, as opposed to declining demand for commercial vessels.
Adding to the proposed arrangements, Mr. Alfredo Ebita, Corporate Secretary of the Shipyards Association of the Philippines, spoke on behalf of the industry and raised the possibility of turning the shipyard into a maritime eco-industrial park, a shared facility to be operated with interested shipyards.
Responding to the various proposals and concerns raised, Usec. Ceferino Rodolfo, Undersecretary for Industries Development and Trade Policy Group of the DTI, explained how the outcome for the former Hanjin shipyard now largely depends on the lending banks, who will decide on who to sell the facility to, albeit pending the approval of concerned government bodies. Usec. Rodolfo reported that the BOI has been in talks with interested parties such as the naval group of France, Damen Shipyards from the Netherlands, and the United States consortium, but nonetheless affirmed that arrangements involving both the Navy and commercial groups are possible. Finally, he reminded that security concerns could be posed not only by Chinese investors, but by any investor, foreign or local, who could have unhindered access to the facility and not put it to its optimum use.
Notwithstanding the various proposals, it was recognized that the closure of Hanjin presented an opportunity for the government to develop the facility into a maritime asset, one that strategically responds to the country’s security concerns in the West Philippine Sea while providing the industrial base that could strengthen the local shipbuilding industry. As a whole, there was consensus that there is a need for the government to take the lead in securing Hanjin as a national shipyard.
The March 14 RTD’s co-sponsors were the UP CIDS Program on Alternative Development, Action for Economic Reforms, Labor Education and Research Network, Freedom from Debt Coalition, and the Samahan ng mga Manggagawa sa Hanjin Shipyard, while the May 7 policy dialogue had the UP Diliman Office of the Vice Chancellor for Research and Development, UP Diliman Colleges of Science and Engineering, and the Asia Pacific Pathways to Progress Foundation, Inc. as co-sponsors.